Core & Main, Inc.CNM
Core & Main, Inc. Income Taxes Disclosure
INCOME TAXES
Core & Main is the general partner of Holdings, which is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, Holdings is generally not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by Holdings is passed through to and included in the taxable income or loss of its partners, including Core & Main. Core & Main is subject to U.S. federal income taxes, in addition to state and local income taxes, with respect to its allocable share of any taxable income of Holdings.
The income before provision for income taxes were attributable to the following jurisdictions:
| Fiscal Years Ended | |||||||||||||||||
| February 1, 2026 | February 2, 2025 | January 28, 2024 | |||||||||||||||
| Domestic | $ | 605 | $ | 576 | $ | 659 | |||||||||||
| Foreign | 2 | 1 | — | ||||||||||||||
| $ | 607 | $ | 577 | $ | 659 | ||||||||||||
The provision for income taxes consisted of the following:
| Fiscal Years Ended | |||||||||||||||||
| February 1, 2026 | February 2, 2025 | January 28, 2024 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 92 | $ | 101 | $ | 98 | |||||||||||
| State | 25 | 29 | 28 | ||||||||||||||
| 117 | 130 | 126 | |||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | 21 | 11 | 2 | ||||||||||||||
| State | 7 | 2 | — | ||||||||||||||
| 28 | 13 | 2 | |||||||||||||||
| Total | $ | 145 | $ | 143 | $ | 128 | |||||||||||
The reconciliations of the provision for income taxes at the federal corporate statutory rate of 21% to the tax provision for fiscal 2025, fiscal 2024 and fiscal 2023 are as follows:
| Fiscal Years Ended | ||||||||||||||||||||||||||
| February 1, 2026 | February 2, 2025 | January 28, 2024 | ||||||||||||||||||||||||
| Provision for income taxes | Effective tax rate | Provision for income taxes | Effective tax rate | Provision for income taxes | Effective tax rate | |||||||||||||||||||||
| $ | 127 | 21.0 | % | $ | 121 | 21.0 | % | $ | 138 | 21.0 | % | |||||||||||||||
State income taxes(1) | 26 | 4.3 | 26 | 4.5 | 23 | 3.5 | ||||||||||||||||||||
| Partnership income not subject to U.S. tax | (4) | (0.7) | (5) | (0.8) | (32) | (5.0) | ||||||||||||||||||||
| Corporate subsidiary tax | — | — | — | — | (2) | (0.3) | ||||||||||||||||||||
| Nontaxable or nondeductible items | — | — | 2 | 0.3 | 2 | 0.4 | ||||||||||||||||||||
| Net benefits from tax credit investments | (4) | (0.7) | — | — | — | — | ||||||||||||||||||||
| Other | — | — | (1) | (0.2) | (1) | (0.2) | ||||||||||||||||||||
| Total provision | $ | 145 | 23.9 | % | $ | 143 | 24.8 | % | $ | 128 | 19.4 | % | ||||||||||||||
(1)For fiscal 2025 state taxes in California, Florida, Illinois, Minnesota, New York, Pennsylvania, Tennessee and New Jersey comprised the majority (greater than 50 percent) of the tax effect in this category. For fiscal 2024 state taxes in California, Florida, Minnesota, Illinois, New York, Pennsylvania, Colorado, Tennessee, Georgia and Wisconsin comprised the majority of the tax effect in this category. For fiscal 2023 state taxes in California, Florida, Illinois, Minnesota, New York, Pennsylvania, Georgia, Wisconsin and New Jersey comprised the majority of the tax effect in this category.
The variations between the Company’s estimated effective tax rate and the U.S. and state statutory rates are primarily due to the portion of the Company’s earnings attributable to non-controlling interests.
The tax effects of temporary differences that give rise to the deferred tax assets and liabilities were as follows:
| February 1, 2026 | February 2, 2025 | ||||||||||
| Deferred Tax Assets: | |||||||||||
Basis difference in partnership investments of Core & Main, Inc. | $ | 510 | $ | 503 | |||||||
| Imputed interest on Tax Receivable Agreements | 50 | 49 | |||||||||
Intangibles | 3 | 4 | |||||||||
Other | 2 | 2.0 | |||||||||
| Deferred Tax Liabilities: | |||||||||||
Basis difference in partnership investments of Core & Main Buyer, Inc. | (89) | (87) | |||||||||
The Company’s operations have resulted in income, and as such, the Company maintains no valuation allowance against its deferred tax assets.
The Company’s cash paid for taxes during fiscal 2025, fiscal 2024 and fiscal 2023, net of refunds, are as follows:
| Fiscal Years Ended | |||||||||||||||||
| February 1, 2026 | February 2, 2025 | January 28, 2024 | |||||||||||||||
| Cash paid for income taxes, net of refunds: | |||||||||||||||||
| U.S. federal | $ | 54 | $ | 112 | $ | 90 | |||||||||||
| U.S. state and local | 25 | 31 | 26 | ||||||||||||||
| Total cash paid for income taxes | $ | 79 | $ | 143 | $ | 116 | |||||||||||
Core & Main, Inc. Partnership Investment
As part of the reorganization transactions performed at the time of the initial public offering, the Company assumed a deferred tax liability associated with the difference between its financial reporting investment and tax basis in Holdings. Subsequent exchanges of Partnership Interests by certain stockholders affiliated with CD&R and Management Feeder that continued to own Partnership Interests beyond the time of the initial public offering created additional tax basis that may reduce taxable income in the future. This resulted in the recognition of deferred tax assets that have been partially offset by incremental recognition of the deferred tax liability assumed at the initial public offering. As of February 1, 2026 and February 2, 2025, the Company had a $510 million and $503 million, respectively, in deferred tax asset associated with the difference between Core & Main’s financial reporting basis and the tax basis of Core & Main’s investment in Holdings.
Buyer Deferred Tax Liability
The Company completed the acquisitions of all the outstanding shares of certain acquired companies through Core & Main Buyer, Inc. (“Buyer”), a wholly-owned subsidiary of the Company. Buyer subsequently contributed these acquired companies to Core & Main LP. The taxable income that is allocated to Buyer, for its contribution of these acquired companies to Core & Main LP, is subject to corporate federal and state income tax in substantially all fifty states. As of February 1, 2026 and February 2, 2025, this deferred tax liability was $89 million and $87 million, respectively.
Tax Receivable Agreements and Reorganization Transactions
The Company is party to the Former Limited Partners Tax Receivable Agreement and the Continuing Limited Partners Tax Receivable Agreement. The Company has generated tax attributes, and expects to generate additional tax attributes with future exchanges of Partnership Interests, that will reduce amounts that it would otherwise pay in the future to various tax authorities. The Tax Receivable Agreements provide payments to the parties subject to the Tax Receivable Agreements, or their permitted transferees, of 85% of the tax benefits realized by the Company, or in some circumstances are deemed to be realized.
The Company recorded payables to related parties pursuant to the Tax Receivable Agreements of $720 million and $725 million as of February 1, 2026 and February 2, 2025, respectively. Payments under the Tax Receivable Agreements within the next 12 months are expected to be $40 million, which is included within other current liabilities in the Balance Sheet.
The actual amount and timing of any potential additional payments under the Tax Receivable Agreements will vary depending upon a number of factors, including the timing of exchanges by the holders of Partnership Interests, the amount of gain recognized by such holders of Partnership Interests, the amount and timing of the taxable income the Company generates in the future and the federal tax rates then applicable. Assuming (i) that Management Feeder exchanged all of their remaining Partnership Interests at $53.36 per share of our Class A common stock (the closing stock price on January 30, 2026), (ii) no material changes in relevant tax law, (iii) a constant corporate tax rate of 24.8%, which represents a pro forma tax rate that includes a provision for U.S. federal income taxes and assumes the highest statutory rate apportioned to each state and local jurisdiction and (iv) that the Company earns sufficient taxable income in each year to realize on a current basis all tax benefits that are subject to the Continuing Limited Partners Tax Receivable Agreement, the Company would recognize a deferred tax asset (subject to offset with existing deferred tax liabilities) of approximately $102 million and a liability of approximately $87 million, payable over the life of the Continuing Limited Partners Tax Receivable Agreement. The full exchange will also decrease Core & Main's aforementioned deferred tax asset associated with its investment in Holdings by $5 million, as Core & Main recognizes the deferred tax consequences associated with the non-controlling Partnership Interests being exchanged. These amounts are estimates only and are subject to change.
Uncertain tax positions
Total gross unrecognized tax benefits as of February 1, 2026 and February 2, 2025, as well as activity within each of the years, were not material.
Investment Tax Credits
In fiscal 2025, the Company invested $37 million in tax advantaged limited partnerships involved in the construction and operation of renewable energy projects. The provision for income taxes, in the Consolidated Statements of Operations, includes $35 million of benefits from income tax credits and other income tax benefits partially offset by $31 million of amortization expense associated with our investments in these partnerships. The income tax credits and other income tax benefits received are included in accrued liabilities in net cash provided by operating activities in the Consolidated Statements of Cash Flows. As of February 1, 2026, the carrying value of these investments was $6 million which is included within other assets in the Balance Sheets.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Mar 24, 2026 | Showing above |
| 2025 | Mar 25, 2025 | |
| 2024 | Mar 19, 2024 | |
| 2023 | Mar 28, 2023 | |
| 2022 | Mar 30, 2022 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.